Extreme weather could hit energy supply

Warmer than average temperatures and a heightened risk of bushfires could affect the supply of energy across Australia, the national energy market operator has warned.

In its Summer Readiness Plan, the Australian Energy Market Operator (AEMO) said extreme weather could affect both the supply and demand for energy.

It cautioned that the Bureau of Meteorology (BoM) has forecast an elevated risk of bushfires and an earlier start to the bushfire season, which could directly impact generators and transmission networks or limit their ability to transfer power.

Higher than average temperatures could also increase the risk of extreme peak demands, limit generator capacity or cause equipment failure, the report said.

Ongoing drought in some parts of the county could also impact both hydro and coal and gas-fired power generation. “Hydro generators use water as a fuel, and thermal generators need it for cooling,” the report said.

The report added extreme conditions could impact the “adequacy and the availability of resources” needed for the power system to meet demand.

Victoria in particular was at risk of missing reliability standards under peak demand, a problem exacerbated by the unavailability of around 250 megawatts of thermal generation. It forecast a one-in-three chance of “plausible, extreme weather conditions” causing a shortfall in energy in Victoria this summer without further mitigating actions being taken.

A further 120 megawatts of reserves would be needed across Victoria and South Australia to meet reliability standards, which could increase to 525 megawatts if the most extreme weather forecasts are realised.

AEMO said it is in talks with operators to identify what capacity would be available and is setting up reserve contracts that can be entered into on short notice in the case of a shortfall. In total AEMO is looking to secure a minimum of 930 megawatts of reserve contracts.

Last summer the cost of these reserve contracts, which totalled 1,141 megawatts, were $51.99m and were covered by market customers in Victoria and South Australia. The total cost is expected to be lower this summer.

By the year to December, AEMO estimated approximately 2,100 megawatts of new capacity would have been added to the grid, mostly from wind and solar generation as well as some battery storage.